The relationship between the US and the World Trade Organization (WTO) represents the principal political and legal framework for America's international economic relations. The WTO exceeds the North American Free Trade Agreement (NAFTA) in importance because of its much larger purview, since its reach is the global market. The WTO is also more prominent than the GATT, its predecessor, both because it was established as an international organization and because it has a vastly enlarged scope. The assumption of formal responsibility for a wide range of issues by the WTO under the Uruguay Round Agreement (URA) guarantees further expansion of its activities, as they acquire substantive content through the implementation of specific agreements. By contrast, the contemporary IMF and the World Bank, discussed in Chapter 4 of this volume, might be regarded essentially as vehicles through which advanced countries, led by the US, determine the conditions under which balance of payments support and development loans are offered. They have little direct bearing on the conduct of domestic policies of advanced economies.
The international trade relations of the US are a source of contemporary controversy. The growing proportion of US gross national product (GNP) in the traded goods sector is undoubtedly having a significant impact on the US economy and society. Such growing international economic specialization is acknowledged to promote greater economic dynamism and prosperity. But it also precipitates socio-economic change and dislocation because new patterns of comparative advantage and specialization impose costs on shrinking sectors, displacing workers and altering the spatial pattern of economic activity. In addition, there is concern that international trade rules under the rubric of the WTO threaten to undermine national environmental policies because they constrain domestic preferences and intensify resource use through growth. Similar concerns are voiced about the cost implications of large disparities in international labour standards that affect comparative advantage, due to working conditions and practices that are deemed to violate human rights.